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Breaking: SEC Files Charges Against Binance for Mishandling Funds and Deceiving Regulators

New York Times | Matthew Goldstein, Emily Flitter and | Jun 5, 2023

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The SEC said the world’s largest cryptocurrency exchange mixed billions of dollars in customer funds and secretly sent them to a separate company controlled by Binance’s founder, Changpeng Zhao.

  • The Securities and Exchange Commission (SEC) has levelled significant allegations against Binance, the world's leading cryptocurrency exchange, accusing it of mismanaging customer funds and dishonest communication with regulators. Binance is accused of blending customer funds amounting to billions of dollars and covertly transferring these to Merit Peak Limited, a separate entity under the control of Binance founder, Changpeng Zhao.
    • The SEC has lodged 13 charges against Binance and Changpeng Zhao, alleging they enriched themselves to the tune of billions of US dollars, while putting investor assets at considerable risk.
    • Among the charges are claims that Binance misled investors regarding the adequacy of its systems to detect and control manipulative trading and their efforts to prevent US investors from trading on its unregulated platform.

See:  OSC Pursues Binance Investigation, Unfazed by Crypto Exchange’s Departure from Canada

  • These charges represent the latest effort by US regulators to clamp down on the often-lawless landscape of cryptocurrency trading and compel major entities in the sector to abide by US laws.
  • Binance is already facing intense scrutiny, with investigations from the Justice Department for potential money laundering violations and a decline in market dominance following the loss of its outside auditing firm, Mazars.

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Binance Blog | Jun 5, 2023

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Binance response

  • Binance has expressed disappointment over the U.S. Securities and Exchange Commission's (SEC) decision to file a complaint against the cryptocurrency exchange.
    • Despite cooperating with the SEC's investigations and engaging in productive discussions for a negotiated settlement, the company feels let down by the SEC's move to litigate.
  • The company strongly rejects the SEC's allegations and plans to vigorously defend its platform.
    • Binance maintains that any allegations suggesting that user assets on the Binance.US platform have ever been at risk are entirely false. They emphasize that all user assets across Binance and its affiliate platforms are secure.
  • Binance criticizes the SEC for its apparent lack of clarity and guidance in regulating the digital asset industry. The company sees the SEC's current approach as heavy-handed and inappropriate for the complex and evolving nature of blockchain technology and cryptocurrencies.

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NCFA Jan 2018 resize - Breaking:  SEC Files Charges Against Binance for Mishandling Funds and Deceiving RegulatorsThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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